Situational Factors that Affect Organizational Performance

Discuss About The Product Diversification Financial Performance.

Adoption of proper business strategy has become very important in order to bring the organizational development (Alexander, 2017). Managing the situational factors have become very important in the current business industry. The term situational analysis indicates the temporary condition of an organization, which influences the purchasing behaviour of the customers. These situational factors can be influenced by the social, physical and time factors. In the case of marketing, the situational factors are considered as the external factors of the business organization. Here the study has discussed the how the situational influences impact on the overall business performance of an organization. In the next question, it has also shed light on the relationship between diversification, competitive market condition and the organizational strategies. Through this process, the global business industry and its external influences have been identified in this study. Through this study, it has been identified that how customer perception influences the decision making procedure of an organization.

According to Fiedler (2015), Contingency approach is an important management theory that indicates the management style. This influenced by the behaviour and particular situation faced by the organization. Hence this can be said that development of contingency approach in an organization has become very important.  On the other hand, it has been identified that organizational environment also gets influenced by the contingency approach. Taylor, A., & Taylor (2014), argued that it plays an important role in the case of decision making by the financial experts of an organization. Therefore, this can be said that through this process the quality of decision making gets improved. If the current business scenario is analysed, it will be identified that after the modification of this approach, it has brought revolution in the business industry. Different challenges and rises faced by the business organizations are being managed by this approach. Hence, this can be said that this approach can be implemented in the case of both large and small business organizations. By solving the challenges and issues of an organization this helps to meet the goals and objectives of the company (Furlan Matos Alves et al., 2017). In the current business scenario, the contingency approach is being used fir increasing the pressure on the management. Through this process, the managers of the company take effective decision for achieving the ultimate goal without delaying.

As opined by Miner (2015), the contingency theory is being used in the case of managing the challenges of an organization. Therefore, this increases the responsibility of the managers to appoint right employees in the proper position so that the productivity will not be compromised. Skill and situational strategies development are influenced by this approach. As the modern contingency approach has brought various changes in the strategical management process of a business organization, therefore, it controls over the ability of the organizational employees. The internal environment development is interconnected with the contingency approach (Skinner, 2014). This process indicates the different organizational behaviour, employee satisfaction and decision making process related challenges. As the modern contingency approach believes in the employee engagement in decision making process. Therefore, as per the modern contingency approach, the employees are being involved in the process of decision making. Through this process their engagement and loyalty towards the organization are being increased.

Contingency Theory and its Influence on Organizational Performance

Before the year 1960, contingency theory only concentrated on the unique circumstances in an organization (Cohen & Olsen, 2015). Decision making process, employee engagement, job satisfaction and employee empowerment were not included in the theory. By following the general management rules, the approach mainly focused on solving the external challenges for bringing organizational development. In the words of Yorio, Willmer & Moore (2015), due to rapid transformation in the business industry, the rate of both the internal and external challenges have increased. On the other hand, due to employee conflict in the organization hampers the overall productivity. In order to manage the situation, modern contingency approach has been introduced in the organization. By which the responsibilities of the higher authorities have been cleared to them. The responsibility of the managers towards employee engagement has been increased. The situational influences handling procedure has changed in the current business scenario. As opined by McCleskey (2014), in order to manage the challenges, the financial advisors have decided to appoint right employees to right place rather than giving pressure to the existing employees. This plays an important role in increasing the performance quality of the company as well as this also influence the employees to increase their dedication towards the organization. The dedicated employees will be more concern about their performance quality, which will bring the advantage for the company.

According to Alexander (2017), the by bringing the specification in contingency theory, Kubick and Kubick have brought huge development in the management procedure of business organizations. Through this practices, the formal roles of the managing body of the organization have been analysed. Another way Oreg & Berson (2015) argued that after the development of contingency theory in 1960, the situational influences in an organization have become transparent. The most important part of this approach is it has highlighted the contextual factors of an organization, which highly influences its organizational performances. These contextual factors are influenced by the environmental effectiveness of the business industry. If the situational influences are analysed, it will be identified that how the organization can experience the challenges from both the external and internal environment.

According to O’Grady  & Lowe (2016), financial crisis, political outbreak, the sudden announcement of war, decreasing rate of GDP, the living standard of people, employment rate,  sudden introduction of international and national rules and regulations and many more. In the case of internal challenges, employee conflict, issues regarding the employee empowerment, increasing manufacturing cost, improper relationship between the managers and the employees can bring various complication in the organizational development. These all factors are influential in the case of measuring the organizational performance. Hence, in order to manage this situation, people introduction of contingency theory in the organizations is needed. By following this practices, decision making process can be developed. If the employees are involved in organizational decision making process, this will help the organization to motivate the employees towards their company (Arrfelt et al., 2015).

The Role of Product Diversification in Organizational Performance

On the other hand, it has been identified that job satisfaction is an essential factor in employee motivation. In the case of increasing the job satisfaction in the organization, the theory has suggested providing different motivational rewards for improving their interest towards the organization.it has also identified that if the managers of the company will maintain healthy relationship with the employees, this will help them to discuss their demands and needs with them (Furlan Matos Alves et al., 2017). By following this strategy, the productivity will be increased. Depending on the productivity, the financial condition of the organization will be improved. Therefore, this can be said that contingency theory is very important in the case of developing the organizational structure as well as increasing its profitability rate.

In the case of this study, it has been identified that in the previous business management practices the uses of contingency theory was very less (Taylor & Taylor, 2014). It was only being used in the case of situational analysis. In the previous contingency theory, the employees were not being involved in any decision making process. Hence, the individuals’ suggestion regarding the development of the organization was not being used. However, Fiedler (2015) argued that in the current business scenario has introduced the theory by adding more flexible policies in which individuals get the chance to give their suggestion in organizational development. Therefore, this can be said that this is very important for the organizations to adopt this theory in order to bring the development in strategic management. In this study, it has been discussed that different situational factors which have a higher level of impact on the business can be reduced by following the contingency approach.  It has been suggested in this study that if the organization will focus on the structural adoption, it may bring the changes in organizational design. By making the organizational structure more organized, the internal environment of the company can be improved.

After analysing the above study, this can say that in the current business scenario, development of contingency theory has become very important. As stated by McCleskey (2014), if the previous contingency theory will be compared with the modern contingency approach, this will be identified that the uses of contingency theory have become very common in the case of organizational development. On the other hand, this has also been identified that in the case of 1960s contingency theory, it highlighted the only situational factors, the employee engagement and motivational factors have not been discussed. In the case of current contingency approach, it has been identified that involvement of employees in decision making process, the company needs to be more polite towards their employees. This will help the organization to provide job satisfaction to the employees. Hence, this can be said that the modern contingency theory is more useful than the previous one in the case of bringing the organizational development.

According to Lievens et al., (2018), diversification is a corporate strategy that helps the organization in order to enter in the new business market. By following this strategy the organization gets the chance to operate unknown market. In this case the organization introduce new product for a new business market. In the current business scenario, the strategy of diversification has become very popular (Chrisman & Su, 2017). In this practice, the business activities are being expanded for following the business trend of that particular market. In the case of product diversification strategy the business organizations introduce the new product or existing product by adding more facilities and features in it. In this study, it has been highlighted that the competition in the market and impact of organizational strategies on the organizational development procedure.

In the case of developing new product in new market, the customers purchasing behaviour gets influenced. As stated by Ardizzon, Cavazzini & Pavesi (2015), it has been identified that the customers always prefer the product which has strong brand image in the market. On the other hand product value also plays an important role for influencing the consumer behaviour. People mostly being attached the products which can influence them emotionally. Therefore, in order to introduce new product in new market the organization needs to focus on understanding the needs and demands of the customers of the area. In the other hand, the standard of living is also very important to be understood by the organisation to develop its reasonable pricing strategy. Therefore, this can be said that he company needs to focus on the development of the company. On the other hand, it has been identified in this study that depending on the customers’ perception the organizational development is being influenced. In order to develop a product in new market, the organization focuses on market analysis (Shen, Au & Yi, 2018). Through this process the cultural preferences of the people of that are being analysed. On the other hand, the organization always tries to develop its business in those areas where the availability of target market is very high. Therefore this can be said that by follow in this.

In this study the relationship between the diversification strategy and organizational performance have been discussed.  As opined by Arrfelt et al., (2015), it has been identified that the impact of these strategies can be different in the case of developed and developing countries. As the product diversification strategy has higher level of risk in the business marketing, therefore this can be assumed in the case of saturated business market the strategy cannot be applicable (Wu, Straub & Liang, 2015).  On the other hand, it has also been identified in this study that depending on the customers’ perception the organizational productivity can get affected. In the case of developing countries, it has been identified that the relationship between the diversification strategy and organizational performance is moderate. Another way Chen et al., (2014) stated that the relationship between the organizational productivity and diversification strategy gets influenced by the uses of physical resources in the organization. In the case of manufacturing unit, the diversification strategy introduces technological advancement and modern equipment which impacts on the production report of the company.

On the other hand, it has been identified that due to development of product diversification strategy, the company needs to focus on creating its strong brand identity to the people. The brand value of the customers will be helping in the case of attracting the large number of customers (Essen et al., 2015). Depending on the availability of the customers in the market, the business revenue of the company will be increased. It has been identified in this study that before adopting the strategy of diversification, the organization needs to focus on market analysis practices. As opined by Grant (2016), through this process, organization will be able to understand the position of competitors in the market. On the other hand, this process will be helping in the case of understanding the external influences of the market, which can create challenges or opportunities in the market. Therefore, this can be said that understanding the market position, the organization will be able to introduce unique features in its business model so that the quality of performance can be improved.

It has been identified in this study that product diversification strategy introduces new product in Newmarket. Therefore grabbing the attention of the customers, the organization focuses on introducing modern technology so that it will be able to provide unique product or service to its customers (Su & Tsang, 2015). On the other hand, it has been identified in that if the technological development can be introduced in the manufacturing unit of the company, it will play an important role to increase the productivity of that organization. Marketing capability is another important element which is needed to be analysed in the case of developing any business strategy. This kind of practices is being influenced by the market research, supply chain management and product distribution channel.

In the case of product diversification, the organizations always try to focus on the operational capability, because this factor is very important in the case of increasing productivity of the company (Short et al., 2016). Therefore, this can be said that through this process, the organization can influence the purchasing behaviour of the company. On the other hand, the study has mentioned that in the case of developing management skills in an organization, the diversification practices are needed. As the study has repeatedly mentioned that in diversification strategy, the organization will be able to manage the organization to manage the situation of the company gets influenced. On the other hand. It has been identified that due to development in management skills the rate of profitability in the organization increases. Therefore this can be said that diversification strategy and organizational performance are interconnected to each other.

Here the study has also highlighted the impacts of competitive analysis on organizational performance. As stated by O’Brien et al., (2014), by identifying the position of the competitors in the market, the organization will be able to get information about needs and demands of the customers. This will be helping in the case of understanding the living standard and cultural performance of the people. Cultural performance and living standard as the two important factors which have strong impact on business performance. Therefore, this can be said that product diversification strategy needs to be developed depending on the customer purchasing behaviour. Another way Mithas & Rust (2016) opined that depending on the situation in the external market the organization develops its strategy so that it will be able to establish its unique position in the market. In the case of developing new product in the market, the availability of demands needs to be analysed by the company. If customers get attractive products in the market in lower range, they easily purchase those products. Once they get satisfied with the company, they also recommend their family and friends. Therefore this can say that, it is very important for the organisation, to develop proper strategy which will be able to attract the customers emotionally. It has also been proved in the study that in order to develop new product in a new market the diversification strategy cannot be enough step, market analysis and competitor analysis are as important as the strategy,

Conclusion

In this study, it has been identified that after the years 1960, the contingency has brought various changes in the business industry. If the current business scenario is analysed, it will be identified that the importance of contingency theory has increased in order to bring the organizational development. In the current situation, the uses of contingency theory have changed. It has been identified in this study that the current contingency theory has focused on the employee engagement and involvement of them in decision making process. It has also highlighted the job satisfaction as an important part of organizational development. It has been suggested in this study that, if the organizational performance of the company needs to be improved, them it needs to appoint the employees in different positions based on their skills. This will be helping in the case of achieving organizational goals and objectives.

From the second section, it has been identified that diversification strategy is highly connected with the organizational performance. It has been identified in this study that the study that technology, management skill and marketing capabilities are very important in the case of measuring organisational performance. This has been identified in this study that if the diversification strategy needs to be implemented properly, the organization needs to focus on identifying the completive advantages in the market. Therefore this can be said that these three elements are dependent on each other and by maintaining the balance between these three elements the organization gets chance to grab the attention of customers.

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